Apple X factor: China buyers rapt by new iPhone, but will they buy?

SHANGHAI/BEIJING (Reuters) - Gu Xiaomeng, a 24-year-old primary school teacher in the eastern Chinese city of Suzhou, says she’s excited about the new iPhone X, set to go on sale on Friday. The challenge for Apple Inc (AAPL.O) is to persuade her to actually buy one.

A attendee uses a new iPhone X during a presentation for the media in Beijing, China October 31, 2017. REUTERS/Thomas Peter

“I’m definitely interested, but don’t currently plan to get one,” said Gu, whose monthly salary of a little over 6,000 yuan ($905.36) is less than the anniversary model’s starting price in China of 8,388 yuan.

For Apple, which is looking to rev up sales in China after several quarters of declining revenue there, the test is that Gu is not alone. While interest in the phone is high, that won’t necessarily translate into sales.

“Price appears to be a major constraint on iPhone X demand, particularly in China,” Bernstein analyst Toni Sacconaghi said in a recent report that showed three-quarters of Chinese respondents were excited by the upcoming launch, but only a quarter said they planned to buy one.

Investors are keen to gauge Chinese demand for the iPhone X, as it is key to reviving Apple’s fortunes in the world’s biggest smartphone market where it has lost some of its sparkle - and market share - as local phone makers have advanced.

The cheaper iPhone 8, which hit the market in September, has faced sluggish sales, but Apple has said that pre-orders for the iPhone X have been “off the charts”.

Apple, due to announce quarterly earnings on Thursday, said it had no immediate comment.

Chatter online on popular Chinese social media platform Weibo (WB.O) also signaled high levels of interest in the new model, though still generally behind levels around the 2014 launch of the very successful iPhone 6.

APPLE “GEEKS”

Xiao Ming, 32, who works for a blockchain start-up in Beijing, stayed up half the night when pre-sales of the iPhone X opened last week. He has also bought the iPhone 8.

“I always try to be one of the first to buy any new iPhone,” he said, adding he likes the new phone’s augmented reality and facial recognition features. “I’ll be very disappointed if I don’t get one on the first day.”

While he plans to buy the new phone, he noted many of his friends were less fussed. “Before, I think a lot of people would try to get it somehow, now it’s mostly the geeks,” he said.

“My friends don’t mind so much if they have an iPhone 8 or a 6, for example, because it looks similar and the price (of the iPhone X) makes you feel nervous.”

Re-sellers and iPhone accessory makers generally agreed there was a buzz about the iPhone X, Apple’s first phone to have a full-screen display and functions such as facial recognition security.

“People are really anticipating this phone because it’s the 10th anniversary version and it has more changes and modifications,” said Gary Yiu, manager of the iGeneration smartphone shop at one Hong Kong mall.

Yiu and three other phone re-sellers there said they had seen strong demand for the phone from mainland clients.

A merchant at the Huaqiangbei electronics hub in Shenzhen, who was offering an iPhone look-a-like called the “E-Feng X” from 1,599 yuan, said sales volumes were “very good”.

Some Chinese re-sellers, however, said they already canceled pre-orders for the iPhone X, concerned there wouldn’t be enough of a supply bottleneck to allow them to charge a steep premium - despite some worries about long waits.

“I saw many friends were posting pictures of themselves successfully ordering the iPhone X, so I canceled mine,” said Tony Tong, 29, a product manager at a tech firm in Beijing, who said he had ordered four phones in the hope of re-selling them for a profit. “The environment is bad for scalpers.”

Apple will hope payment plans and easy access to online credit in China will convince people to buy.

Wang Hao, a 24-year-old engineer in the northeastern port city of Dalian, said he ordered the new phone despite the high price tag. His last phone was an iPhone 6S.

“The cost is about a month’s salary for me,” he told Reuters. “But I’m just used to it now, and there wasn’t really anything to make me choose another brand.”